HSBC is latest to suspend 'packaged account' sales

The bank has withdrawn its 'packaged’ accounts as complaints from customers
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HSBC has suspended sales of its main paid-for bank account as it prepares to move customers to a new deal.

The bank’s actions coincide with a swell in criticism of so-called packaged current accounts, which cost up to £300 a year for a range of insurance perks. Complaints about such accounts have more than tripled in a year, with some customers claiming they never knew of, or wanted, the benefits.

Regulators are keeping a close eye on the way the accounts are marketed, sold and run, and the Financial Conduct Authority now requires banks to conduct regular checks to ensure customers are being charged for a suitable service.

Lloyds TSB stopped offering accounts in branches and over the telephone in December 2012 as it “amended” its sales process, while Barclays has altered its accounts so customers voluntarily sign up to benefits they want. Santander last year ditched the accounts completely.

HSBC said halting the promotion of its Advance current account, which costs £12.95 a month and includes worldwide travel insurance and breakdown cover, was unrelated to any regulatory scrutiny.

A spokesman for HSBC said it intended to offer a new version of the Advance account later this year, at which point existing Advance customers would be moved to the new deal.

Just one in 10 HSBC current account customers held a paid-for deal, the company said, compared with an industry average of three in 10. This, the spokesman said, was evidence that the bank “was in a very good place in terms of the way our accounts are being sold”.

In a statement, HSBC said: “In preparation for the launch of the new version of the HSBC Advance current account, expected later this year, the account is temporarily unavailable to new customers in the UK. This will allow for a smoother transition to the new version of HSBC Advance and reduces the risk of disruption to customers.”

Campaigners have warned that packaged current accounts, which are held by 11 million people, could become the next banking mis-selling scandal.

But so far complaint levels have not been high enough to justify fears of a repeat of the payment protection insurance mis-selling fiasco, which has affected millions of people.

The financial ombudsman said that in the year to March, it had received 5,667 complaints about packaged current accounts, up from 1,629 the previous year. Of these, 78pc were decided in the customer’s favour.

The ombudsman only deals with complaints that have been rejected by banks. This suggests the true level of complaints each year could be nearer 100,000, sources said. An ombudsman spokesman said most complaints were about the sale of packaged policies, while they also arose when customers claimed on the insurance, only to find it offered limited cover.

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By Sophie Christie

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